Monetary Policy Report 2008:2

The repo rate is raised to 4.5 per cent The repo rate needs to be raised further during the course of the year To meet the inflation target of two per cent

Repo rate raised and interest rate path adjusted upwards Inflation is increasing more rapidly than expected Large increase in the oil price and remaining at a high level Inflation expectations too high

Monetary policy deliberations Financial turbulence Dampened growth in Sweden and abroad Inflation above the target The oil price Inflation expectations

Note. Broken lines refer to the Riksbank’s forecasts Repo rate raised and interest rate path adjusted upwards Per cent, quarterly average MPR 2008:2 MPU April 2008 Note. Broken lines refer to the Riksbank’s forecasts Source: The Riksbank

Inflation increasing more rapidly than expected CPI, annual percentage change MPR 2008:2 MPU April 2008 Note. Broken lines refer to the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank

Source: Intercontinental Exchange and the Riksbank Substantial increase in the oil price and continued high level USD per barrel Oil price, outcome Futures, average up to 16 January 2008 (MPR 2008:1) Futures, average up to 11 April 2008 (MPU 2008:1) Futures, average up to 18 June 2008 (MPR 2008:2) Source: Intercontinental Exchange and the Riksbank

Source: Prospera Research AB Inflation expectations too high Different groups’ inflation expectations two years ahead Annual percentage change Purchasing managers’ index Social partners Money market participants Source: Prospera Research AB

Sources: Reuters Ecowin and the Riksbank Continuing financial turmoil Difference between interbank rates and expected policy rates, basis points Sweden Euro area USA United Kingdom Note. The difference is calculated as the difference between the 3-month interbank Rate and the 3-month overnight index swap. Sources: Reuters Ecowin and the Riksbank

Households are more pessimistic Confidence indicators for households, net figures Sweden (left scale) Euro area (left scale) USA (right scale) Sources: European Commisssion, Conference Board and National Institute of Economic Research

Weaker GDP growth in Sweden Quarterly change in per cent, calculated at an annual rate, seasonally-adjusted data GDP according to NA 2007:3 Forecast, MPR 2008:1 GDP according to NA 2007:4 Forecast, April 2008 GDP according to NA 2008:1 Forecast, MPR 2008:2 Note. Broken lines refer to the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank

Note. Broken lines refer to the Riksbank’s forecasts Employment has increased strongly Thousands of persons, seasonally-adjusted data Note. Broken lines refer to the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank

Risks in the interest rate forecast + Higher inflation and lower growth - Falling commodity prices - Financial turmoil

Repo rate Per cent Source: the Riksbank

Repo rate a forecast -not a promise Per cent, quarterly average 90% 75% 50% Repo rate Note. Broken lines refer to the Riksbank’s forecasts Source: The Riksbank

Nominal and real repo rates Per cent Forecast, real repo rate, MPR08:2 Forecast, real repo rate, MPU08:1 Nominal repo rate Forecast, nominal repo rate, MPR08:2 Forecast, nominal repo rate, MPU08:1 Sources: National Institute of Economic Research, Prospera Research AB and the Riksbank